This week, we’re continuing our archive miniseries, Myths That Built Trickle-Down Economics, with the myth that corporations exist to maximize shareholder value. For decades, Americans were sold the idea that if corporations focused on boosting stock prices and rewarding shareholders, prosperity would trickle down to workers, consumers, and communities. Instead, shareholder primacy helped justify stock buybacks, wage suppression, layoffs, and underinvestment — extracting wealth from the real economy and funneling it upward. In this episode, Nick and Goldy talk with William Lazonick and Lenore Palladino about how shareholder value became one of the core myths of trickle-down economics, why it has caused so much damage, and what it would mean to build corporations around workers, consumers, communities, and long-term prosperity instead.
What is the purpose of a corporation? (with William Lazonick and Lenore Palladino)
Nick, Goldy, and their guests William Lazonick and Lenore Palladino explain why “shareholder value maximization” is the world’s dumbest idea. nWilliam Lazonick: Professor of economics at University of Massachusetts Lowell, visiting Professor at University of Ljubljana, professeur associé at Institut Mines-Télécom in Paris, and professorial research associate, SOAS, University of London. His book ‘Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States’ won the 2010 Schumpeter Prize, and he has written extensively on corporate profits.nTwitter: @LazonicknLenore Palladino: Senior Economist and Policy Counsel at the Roosevelt Institute, where she brings expertise to Roosevelt’s work on inequality and finance. Her research and writing focuses on financial reform, financial taxation, labor rights, and financial crises. Her publications have appeared in The Nation, The New Republic, State Tax Notes, and other venues. nTwitter: @lenorepalladinonFurther reading: nhttps://www.brookings.edu/research/stock-buybacks-from-retain-and-reinvest-to-downsize-and-distribute/nhttps://hbr.org/2014/09/profits-without-prosperity/nhttp://rooseveltinstitute.org/ending-shareholder-primacy-corporate-governance/nhttp://rooseveltinstitute.org/rewriting-rules-take-aim-stock-buybacks-and-force-companies-invest-their-workers-stop-walmart-act/nhttp://rooseveltinstitute.org/what-wells-fargos-40-6-billion-stock-buybacks-could-have-meant-its-employees-and-customers/nhttp://rooseveltinstitute.org/towards-accountable-capitalism/